Nvidia Headlines A Big Week For Tech

Summary:

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The economic calendar in the U.S. includes updates on durable goods, consumer confidence, trade balances, pending home sales, and the PCE inflation print. The Bureau of Economic Analysis’ PCE report will be the last one ahead of the Federal Reserve’s next decision on interest rates on September 18. Following the Jackson Hole Symposium, the backdrop for the week is that the economy is slowing enough for the Federal Reserve to lower interest rates. To that point, Seeking Alpha Investing Group Leader Bret Jensen highlighted that the five signals of economic deterioration include rising unemployment, slowing GDP growth, weakening leading economic indicators, consumer distress, and a normalizing yield curve.

Aside from the economic reports, Nvidia’s (NASDAQ:NVDA) earnings report has the potential to move markets. “While there’s been plenty of economic data and consumer earnings this week, let’s be honest, many traders have been waiting for Nvidia earnings,” stated Roundhill Financial CEO said David Mazza. “Considering so much of this earnings season to date has been focused on corporate spending on AI, traders will want to see how much the stock can keep benefiting from this as it remains one of the only cut and dry AI winners,” he added. There is a flurry of previews on Nvidia (NVDA) from Seeking Alpha analysts for investors to dive into. The earnings calendar for the week ahead also includes key reports from Salesforce (CRM), CrowdStrike (CRWD), Best Buy (BBY), and Dollar General (DG).

Earnings spotlight: Monday, August 26 – BHP Group (BH), Heico (HEI), and Trip.com (TCOM). See the full earnings calendar.

Earnings spotlight: Tuesday, August 27 – Bank of Montreal (BMO), Bank of Novia Scotia (BNS), PVH (PVH), and Box (BOX).See the full earnings calendar.

Earnings spotlight: Wednesday, August 28 – Nvidia (NVDA), Salesforce (CRM), Royal Bank of Canada (RY), CrowdStrike (CRWD), HP (HPQ), Okta (OKTA), J.M. Smucker (SJM), and Pure Storage (PSTG). See the full earnings calendar.

Earnings spotlight: Thursday, August 29 – Dell Technologies (DELL), Marvell Technology (MRVL), Autodesk (ADSK), Dollar General (DG), Best Buy (BBY), Gap (GAP), Ulta Beauty (ULTA), and Lululemon (LULU). See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Sana Biotechnology (SANA) and Clover Health Investments (CLOV). The most overbought stocks per their 14-day relative strength index include BAIYU Holdings Inc (BYU), Nutex Health (NUTX), and U-BX Technology (UBXG). The most oversold stocks per their 14-day Relative Strength Index include Verrica Pharma (VRCA), Tela Bio (TELA), and Westrock Coffee (WEST). Short interest has moved higher on Longeveron (LGVN) and Lucid Group (LCID). Trump Media & Technology Group (DJT) will be watched closely, with Donald Trump less than a month away from being able to sell part of his 60% stake in the company. The stock is down 40% over the last six months.

IPO watch: No new IPOs are expected to start trading in the U.S. The IPO lockup period expires for a block of shares of SolarMax Technology (NASDAQ:SMXT).

Dividend watch: Companies that have an ex-dividend date coming next week include Johnson & Johnson (JNJ), Hyatt (H), Yum! Brands (YUM), and eBay (EBAY). Companies forecast to increase their quarterly dividend payouts include Lam Research (LRCX) to $2.20 from $2.00 and Greif (GEF) to $0.54 from $0.52. Read through some of the dividend stock picks from Seeking Alpha analysts.

Nvidia earnings preview: Nvidia (NVDA) will report earnings on August 28 in a highly anticipated report that could have broad implications for the AI growth story. Analysts expect Nvidia (NVDA) to report revenue of $28.7 billion, operating profit of $18.8 billion, and EPS of $0.64. R&D expenses for the quarter are forecast to be $3.0 billion. Wedbush Securities Dan Ives believes the Nvidia (NVDA) report makes the week the most important of the year for the stock market this year. He noted that cloud numbers and AI data points from Microsoft (MSFT), Amazon (AMZN), and Google (GOOG) were strong during earnings season in an indication that massive enterprise AI demand is now underway. Of course, Nvidia (NVDA) has had a strong start to the year, with Q1 numbers blazing in ahead of market expectations. Revenue shot up 262% to $26 billion in Q1, due largely to accelerating demand for its artificial intelligence computing platforms. Hargreaves Lansdown analyst Aarin Chiekrie noted that Nvidia’s (NVDA) costs are being controlled well, meaning operating profits are also shooting higher. On Seeking Alpha, analysts are very bullish on Nvidia (NVDA). The Asian Investor said there does not appear to be any evidence of AI fatigue ahead of the company’s earnings report. Yiannis Zourmpanos called Nvidia (NVDA) a buy ahead of earnings day. “With solid customer reliance and a growing ecosystem, Nvidia is well-positioned to maintain its monopoly-like status in the rapidly expanding AI market, making it a key player to watch as the AI revolution unfolds,” noted Zourmpanos. One of the key aspects of the Nvidia (NVDA) is the multiplier effect for every $1 spent on an Nvidia GPU chip. The major supplier to Nvidia (NVDA) that has the highest degree of trading correlation directionally with the Santa Clara-based chip giant is Fabrinet (FN). The tech stocks that correlate the tightest to Nvidia following its earnings report release are Taiwan Semiconductor Manufacturing (TSM), Lam Research Corporation (LRCX), and ASML Holding N.V. (ASML). Options trading implies a share price swing of 7% for Nvidia on the first full trading day after earnings. Nvidia peeled off 2.5% after its last earnings report. On a market capitalization basis, Nvidia (NVDA) is the second most valuable company in the U.S., just ahead of Apple (AAPL).

Investor events: The three-day VMWare Explore event will begin in Las Vegas. Broadcom (NASDAQ:AVGO) CEO Hock Tan will address VMware Explore attendees during the general session keynote titled “Shaping the Future of Cloud and AI Innovation.” The event has been used to announce strategic partnerships in the past. Super Micro Computer (SMCI), AMD (AMD), Micron (MU), Microsoft (MSFT), Expedia (EXPE), Mastercard (MA), and Visa (V) are some of the companies that will participate in the two-day Deutsche Bank Technology Conference. On the M&A front, shareholders of Marathon Oil Corporation (NYSE:MRO) will vote on the planned merger with ConocoPhillips (NYSE:COP). The merger is part of a broader consolidation trend in the oil and gas industry aimed at achieving greater efficiencies and economies of scale. The HSR review period by the Federal Trade Commission will expire during the week on Boeing’s (BA) acquisition of Spirit AeroSystems (SPR) and Darden Restaurants’ (DRI) acquisition of Chuy’s Holdings (CHUY).